They seem to be taking this policy rate down about 0.1% per day or so since the big one-day drop last week the day of the announcement...
Whatever process they are using to adjust this rate is ending up supporting the CHF vs the USD and EUR while the SNB probably wants these currencies to rise vs the CHF as balances of these two foreign currencies are about the only financial assets the SNB has... these 2 financial assets and gold, that is about all that comprises the SNB balance sheet.
And I'd assume the SNB is sitting on big losses on these 2 currency positions based on the huge moves down by these currencies last week vs. the CHF.
At this pace, they should be about at the lower limit of this policy rate range of -1.25% by next Wednesday. At that point maybe they will finally get some of the CHF weakness they are probably looking for as they will have to stop whatever it is that they are doing to lower this policy rate everyday.
This is similar in outcome to our US Fed finally stopping the QE and then we can finally get the nice bond rally we've had and lower rates that current borrowers are now finally able to take advantage of.
I don't know what the costs are to store money and secure it, but 1.25% has to be close. You've got to question at what point it is cheaper to hold excess reserves as vault cash than to deposit electronic money at the central bank and be subjected to the deposit tax.
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